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Environment Specialist, Inc. v. Wells Fargo Bank Northwest, N.A.

Supreme Court of Virginia

February 12, 2016

ENVIRONMENT SPECIALIST, INCORPORATED, T/A HOWELL'S HEATING AND AIR CONDITIONING CO.
v.
WELLS FARGO BANK NORTHWEST, N.A., AS TRUSTEE OF THE GSA FREDERICKSBURG FBI 2013 PASS-THROUGH TRUST

FROM THE CIRCUIT COURT OF STAFFORD COUNTY. Michael E. Levy, Judge.

Reversed and remanded.

William B. Cave (Cave & Associates, on briefs), for appellant.

Jennifer A. Brust (William E. Evans; Bean, Kinney & Korman, on brief), for appellee.

OPINION

PRESENT: All the Justices

DONALD W. LEMONS, CHIEF JUSTICE

In this appeal, we consider whether the trial court erred when it awarded $1200 in sanctions against plaintiff's counsel for counsel's failure to voluntarily extend the time in which a defendant might file its answer.

Page 148

I. Facts and Proceedings

Environment Specialist, Inc., t/a Howell's Heating & Air Conditioning Co. (" ESI" ) filed a complaint in the Circuit Court of Stafford County (" trial court" ) against Stafford Office One, LLC, Stafford Office Two, LLC, Stafford Management I, LLC (collectively the " Stafford defendants" ), Lawyers Title Realty Services, Inc., and Wells Fargo Bank Northwest, N.A., Trustee (" Wells Fargo" ), in order to enforce a mechanics lien. According to the complaint, ESI had contracted with the Stafford defendants, the owners of the property in question, to perform certain HVAC improvements. At the time the complaint was filed, ESI asserted that there was an unpaid balance of $24,449.30 that it was owed. Wells Fargo was named in the complaint because it was the trustee and secured party under the " Credit Line Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing Statement" dated March 25, 2013, related to the property in question.

ESI's complaint was filed with the trial court on October 21, 2013. On October 29, 2013, the complaint was forwarded via the Secretary of the Commonwealth to Wells Fargo, and the Secretary filed a certificate of compliance with the clerk of the trial court on October 30, 2013. See Code § 8.01-329. Counsel for Wells Fargo, however, did not learn of the filing of the complaint until November 21, 2013. Counsel for Wells Fargo contacted counsel for ESI and requested a brief extension of the deadline within which to file its answer. Counsel for ESI did not consent to the requested extension. Wells Fargo then filed a motion for leave to file answer out of time, asking for leave to file the answer on or before November 26, 2013, and requested its " fees and costs incurred with regard to the motion." Wells Fargo did not cite any authority for the court's award of " fees and costs."

On January 2, 2014, the trial court entered a consent order between ESI and the Stafford defendants. The Stafford defendants agreed that they owed ESI the amount specified in the complaint, and agreed that the mechanics lien was a valid and enforceable lien against the property. Judgment was therefore entered jointly and severally against the Stafford defendants. Despite the entry of the consent order, on January 6, 2014, ESI filed a motion for default judgment against all the defendants, because none of the defendants had filed a responsive pleading within the 21-day period afforded by Rule 3:8.

The trial court held a hearing on February 3, 2014, to consider Wells Fargo's motion for leave to file answer out of time and ESI's motion for default judgment. The trial court granted Wells Fargo's motion and ordered ESI's counsel to reimburse Wells Fargo's counsel $1200 for " fees and costs" incurred regarding the motion for leave to file answer out of time. In that order, the trial court required that the payment be made within 30 days, which was subsequently done " under protest." By separate order, the trial court granted ESI's motion for default judgment against defendant Lawyers Title Realty.

Thereafter, Wells Fargo, the only remaining defendant, and ESI advised the court that the matter had been settled. In its final order, entered February 18, 2014, the trial court stated that the judgment entered on January 2, 2014, had been satisfied and therefore released the mechanics lien. The trial court also stated that it had issued the $1200 sanctions award against ESI's counsel " for its failure to voluntarily extend the time in which Wells Fargo might file its answer." In its order, ...


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